Africa as next biz frontier must support MSMEs’ growth – Familoni

…as SMEDAN says 3m MSMEs lost to Covid-19

Olajumoke Familoni, a professor of management/entrepreneurship says Africa must be intentional in preparing itself as the next business frontier by embracing digital transformation and supporting Mirco, Small and Medium Enterprises (MSMEs) to grow and thrive.

Familoni made the submission at a two-day summit in Lagos, with the theme, “Renewing MSMEs in Nigeria: Navigating disruption & embracing change in the new digital world”, organised by ICLED Business School and supported by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

According to Familohin, who is the founder of the Innovation Centre for Leadership and Entrepreneurship Development (ICLED), there is an urgent need for MSMEs in Africa, particularly Nigeria, to adapt to the technological change and the change in the business landscape which is driving innovation, inclusiveness and sustainable growth.

Read also: Africa as next biz frontier must support MSMEs’ growth – Familohin

“The pandemic caused by COVID-19 has brought about disruptions and a new reality of a resilient global business environment in which MSMEs must operate and source for ways of thriving.

MSMEs in Nigeria are over 40 million and employ over 80 million people. The pandemic shut down most of their doors and the technology needed to cope with the new customers’ needs is lacking. While financial palliatives were provided by different arms of the government it is not sufficient to open their doors.”

Familoni, therefore, submitted that for the MSMEs to adapt and thrive, they need much more than new rounds of financing, supply chains, leadership, and management skills, adding that “the old world they know has been disrupted.”

“They now need to streamline their supply chain, synergise within their ecosystems, analyse and implement data-driven insight, make more informed decisions, recognise emerging trends, and take advantage of opportunities, with effective delivery management techniques.

“It’s been forecasted that Africa is the next business frontier, not China or USA, but we need to prepare for this to happen, we need to take advantage,” Familoni noted.

Also speaking at the event, Olawale Fasanya, the director-general of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), said the devastating COVID-19 pandemic that swept through the world in 2020, caused about three million MSMEs in Nigeria to close shop.

Read also: SMEDAN, BOI partner ICLED for MSMEs’ accelerated growth

According to SMEDAN in its survey conducted with the Nigeria Bureau of Statistics (NBS), which highlighted the vulnerability of small businesses in Nigeria and the need to support their growth, the country in 2017 had about 41.2 million MSMEs and in 2020, they came down to 39.6 million. Fasanya, represented by Friday Opara, a director in SMEDAN, noted that within the 39.6 million MSMEs in 2020, about 96.9 percent were within NANO and micro enterprises.

He said, “That is to tell us that 3.1 percent is just small and medium-sized, and that is a big job for those within the MSMEs ecosystem.

“Especially SMEDAN, Standards Organisation of Nigeria, Nigerian Export Promotion Council, National Agency for Food and Drug Administration and Control, amongst others.

“We should see to how we can mainstream these 96.9 percent micro enterprises to small and medium-sized; and if you look at the type of crisis we are having in terms of youth unemployment and we say we have 39.6 million MSMEs, assuming we employ one each, a lot will be off the market.

“This is part of the mandate of the agency to ensure that we have the capacity to make a small legion of that to enable them contribute more to the GDP.’’

Stephen Aliu, a professor and team leader, the Centre for Entrepreneurship Development and Wealth Creation and faculty member, ICLED Business School, said fostering growth and development of MSMEs would require relevant stakeholders to implement best practices as done in other climes.

Read also: Fixing constrains seen repositioning Nigeria’s 39.6m MSMEs

“SMEs often face challenges in accessing finance due to limited collateral or credit history.

“Governments and financial institutions should develop tailored financial products such as microloans, venture capital funds, or crowdfunding platforms to provide affordable and accessible financing options for SMEs.”